FOREIGN MONOPOLIES AND TARIFF AGREEMENTS UNDER INTEGRATED MARKETS

Santiago Rubio and María Dolores Alepuz
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María Dolores Alepuz: Universitat de València

Working Papers. Serie AD from Instituto Valenciano de Investigaciones Económicas, S.A. (Ivie)

Abstract: In this paper the optimal policy and the stability of a tariff agreement among the importers of a monopolized good that is sold in an integrated market are studied. To analyze the stability, the tariff agreement formation is modelled as a two-stage game. In the first stage each importer decides whether or not to sign the agreement and in the second stage the signatories and non-signatories choose their tariff whereas the monopoly chooses the quantity or the price. The findings show that the optimal policy of the importers depends on which strategic variable is selected by the monopolist but that, on the contrary, this decision has no effects on the level of cooperation that can be reached by a self-enforcing tariff agreement that, in any case, is very low.

Keywords: foreign monopolies; self-enforcing tariff agreements; integrated markets; rent-shifting hypothesis; prices versus quantities (search for similar items in EconPapers)
JEL-codes: D42 F13 (search for similar items in EconPapers)
Pages: 36 pages
Date: 2005-12
New Economics Papers: this item is included in nep-mic
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Persistent link: https://EconPapers.repec.org/RePEc:ivi:wpasad:2005-38

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